THE SOUTH FLORIDA CHURCH OF CHRIST, INC.

Transcription

1 THE SOUTH FLORIDA CHURCH OF CHRIST, INC. FINANCIAL STATEMENTS

2 THE SOUTH FLORIDA CHURCH OF CHRIST, INC. FINANCIAL STATEMENTS TABLE OF CONTENTS PAGES Independent Auditor s Report 1 Statement of Financial Position 2 Statement of Activities 3-4 Statement of Cash Flows 5 Notes to Financial Statements 6-10

3 To the Board of Directors The South Florida Church of Christ, Inc. Davie, Florida INDEPENDENT AUDITOR S REPORT We have audited the accompanying financial statements of The South Florida Church of Christ, Inc. (a nonprofit organization) (the Church ), which comprise the statement of financial position as of, and the related statements of activities and cash flows for the year then ended, and the related notes to the financial statements. Management s Responsibility for the Financial Statements Management is responsible for the preparation and fair presentation of these financial statements in accordance with accounting principles generally accepted in the United States of America; this includes the design, implementation, and maintenance of internal control relevant to the preparation and fair presentation of financial statements that are free from material misstatement, whether due to fraud or error. Auditor s Responsibility Our responsibility is to express an opinion on these financial statements based on our audit. We conducted our audit in accordance with auditing standards generally accepted in the United States of America. Those standards require that we plan and perform the audit to obtain reasonable assurance about whether the financial statements are free from material misstatement. An audit involves performing procedures to obtain audit evidence about the amounts and disclosures in the financial statements. The procedures selected depend on the auditor s judgment, including the assessment of the risks of material misstatement of the financial statements, whether due to fraud or error. In making those risk assessments, the auditor considers internal control relevant to the entity s preparation and fair presentation of the financial statements in order to design audit procedures that are appropriate in the circumstances, but not for the purpose of expressing an opinion on the effectiveness of the entity s internal control. Accordingly, we express no such opinion. An audit also includes evaluating the appropriateness of accounting policies used and the reasonableness of significant accounting estimates made by management, as well as evaluating the overall presentation of the financial statements. We believe that the audit evidence we have obtained is sufficient and appropriate to provide a basis for our audit opinion. Opinion In our opinion, the financial statements referred to above present fairly, in all material respects, the financial position of The South Florida Church of Christ, Inc. as of, and the changes in its net assets and its cash flows for the year then ended in accordance with accounting principles generally accepted in the United States of America. Fort Lauderdale, Florida May 20, 2014 KEEFE McCULLOUGH KMCcpa.com 6550 N Federal Hwy, 4th Floor Fort Lauderdale, FL Phone: Fax:

4 STATEMENT OF FINANCIAL POSITION A S S E T S ASSETS: Cash and cash equivalents $ 947,241 Accounts receivable, less allowance for doubtful accounts of $ 4,000 16,132 Prepaid expenses and other assets 62,131 Deposits 6,750 Property held for sale 45,000 Property and equipment, less accumulated depreciation of $ 1,239,875 5,199,946 Total assets $ 6,277,200 L I A B I L I T I E S A N D N E T A S S E T S LIABILITIES: Accounts payable $ 20,640 Accrued interest payable 14,589 Line of credit payable 1,562 Other accrued expenses 7,792 Deferred revenue 10,641 Obligation of swap agreement 171,403 Debt 3,231,914 Total liabilities 3,458,541 COMMITMENTS (Note 7) - NET ASSETS: Unrestricted: Undesignated 2,692,256 Temporarily restricted 126,403 Total net assets 2,818,659 Total liabilities and net assets $ 6,277,200 The accompanying notes to financial statements are an integral part of these statements. 2

5 STATEMENT OF ACTIVITIES For the Year Ended Temporarily Unrestricted Restricted Total UNRESTRICTED NET ASSETS: Support and revenues: Contributions $ 2,483,750 $ 572,139 $ 3,055,889 School tuition 447, ,957 Special events 85,481-85,481 Other school fees 45,600-45,600 Interest income Miscellaneous income 38,095-38,095 Net assets released from restriction 635,857 (635,857) - Total unrestricted support and revenues 3,737,369 (63,718) 3,673,651 Program service expenses: Compensation and fringe benefits 1,456,209-1,456,209 Mission support 543, ,656 Interest expense 183, ,445 Rent 151, ,705 Provision for depreciation 147, ,011 Expense reimbursement 110, ,655 Special events 91,798-91,798 Repairs and maintenance 84,318-84,318 Travel, seminars & training 66,360-66,360 Supplies and books 47,933-47,933 Telephone and utilities 41,256-41,256 Payroll taxes 36,961-36,961 HOPE worldwide & benevolence 27,274-27,274 Insurance 24,042-24,042 Furniture, fixtures and equipment 20,211-20,211 Other school fees 20,091-20,091 Meals and entertainment 19,321-19,321 Postage and printing 13,013-13,013 Children's ministry 9,512-9,512 Professional fees 6,731-6,731 Fund raising & advertising 5,461-5,461 Gifts 4,567-4,567 Office expense 3,780-3,780 Equipment rental 3,610-3,610 Total program service expenses 3,118,920-3,118,920 The accompanying notes to financial statements are an integral part of these statements. 3

6 STATEMENT OF ACTIVITIES (continued) For the Year Ended Temporarily Unrestricted Restricted Total Administrative and general expenses: Compensation and fringe benefits 229, ,229 Payroll taxes 16,708-16,708 Professional fees 16,588-16,588 Travel, seminars & training 7,286-7,286 Office expense 6,523-6,523 Telephone and utilities 4,358-4,358 Supplies and books 2,890-2,890 Postage and printing 1,753-1,753 Meals and entertainment 1,173-1,173 Equipment rental Total administrative and general expenses 287, ,034 Total expenses 3,405,954-3,405,954 Excess of support and revenues over (under) expenses 331,415 (63,718) 267,697 Other revenues: Net change in fair value of interest rate swaps 167, ,012 Change in net assets 498,427 (63,718) 434,709 NET ASSETS, January 1, ,193, ,121 2,383,950 NET ASSETS, $ 2,692,256 $ 126,403 $ 2,818,659 The accompanying notes to financial statements are an integral part of these statements. 4

7 STATEMENT OF CASH FLOWS For the Year Ended CASH FLOWS FROM OPERATING ACTIVITIES: Change in net assets $ 434,709 Adjustments to reconcile change in net assets to net cash provided by operating activities: Provision for depreciation 147,011 Change in fair value of interest rate swap (167,012) Unrealized gain on property held for sale (5,813) Changes in assets and liabilities: Increase in accounts receivable (5,374) Decrease in prepaid expenses and other assets 10,867 Increase in deposits (50) Decrease in accounts payable (2,502) Decrease in accrued interest payable (454) Decrease in other accrued expenses (1,777) Increase in deferred revenue 3,156 Net cash provided by operating activities 412,761 CASH FLOWS FROM INVESTING ACTIVITIES: Payments for purchase of property and equipment (24,829) Net cash used in investing activities (24,829) CASH FLOWS FROM FINANCING ACTIVITIES: Proceeds from line of credit 113,701 Payments on line of credit (117,908) Principal payments on debt (278,131) Net cash used in financing activities (282,338) Net increase in cash and cash equivalents 105,594 CASH AND CASH EQUIVALENTS, January 1, ,647 CASH AND CASH EQUIVALENTS, $ 947,241 The accompanying notes to financial statements are an integral part of these statements. 5

8 NOTES TO FINANCIAL STATEMENTS NOTE 1 - ORGANIZATION AND OPERATIONS The South Florida Church of Christ, Inc. (the "Church") is a Florida not-for-profit exempt organization dedicated to charitable, religious and educational purposes, including missionary activities, worship services and counseling. The Church also operates a weekday school with educational goals consistent with the purposes of the Church. NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES Basis of presentation: Financial statement presentation follows the recommendation of the Financial Accounting Standards Board in its Accounting Standards Codification (ASC) , Not-for-Profit Entities Presentation of Financial Statements. Under ASC 958, the Church is required to report information regarding its financial position and activities according to three classes of net assets: unrestricted net assets, temporarily restricted net assets, and permanently restricted net assets. Restricted and unrestricted revenue and support: Contributions received are recorded as unrestricted, temporarily restricted, or permanently restricted support, depending on the existence and/or nature of any donor restrictions. Support that is restricted by the donor is reported as an increase in unrestricted net assets if the restriction expires in the reporting period in which the support is recognized. All other donorrestricted support is reported as an increase in temporarily or permanently restricted net assets, depending on the nature of the restriction. When a restriction expires (that is, when a stipulated time restriction ends or purpose restriction is accomplished), temporarily restricted net assets are reclassified to unrestricted net assets and reported in the statement of activities as net assets released from restrictions. Temporarily restricted assets consist of cash and cash equivalents of $ 126,403, for which is to be used primarily for mission support and debt reduction. The Church had no permanently restricted net assets as of. Cash and cash equivalents: The Church considers all highly liquid investments with a maturity of three months or less when purchased to be cash equivalents. The Church maintains cash balances at five financial institutions for which all deposits held in noninterest-bearing transaction accounts are fully insured regardless of the amount in the account. Accounts receivable and allowance for doubtful accounts: The Church uses the reserve method to account for uncollectible accounts receivable. Accounts receivable are presented net of an allowance for doubtful accounts. The Church management believes a reserve of $ 4,000 is necessary as of and all remaining receivables are fully collectible. 6

9 NOTES TO FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Promises to give: Unconditional promises to give are recognized as revenues or gains in the period received and as assets, decreases in liabilities, or expenses depending on the form of the benefits received. Conditional promises to give are recognized when the conditions on which they depend are substantially met. The Church had no unconditional or conditional promises to give as of. Property and equipment: Acquisitions greater than $ 1,000 with a useful life longer than one (1) year are capitalized. Purchased property and equipment are recorded at cost and donated property and equipment are valued at fair value at the time of donation. The Church s policy is to provide for depreciation using the straight-line method over the following estimated useful lives of the assets: Building and improvements Site improvement Equipment Furniture and fixtures Computer software years 7-20 years 3-5 years 7 years 3 years Donated property and equipment are reported as unrestricted support unless the donor has restricted the donated asset to a specific purpose. Assets donated with explicit restrictions regarding their use and contributions of cash that must be used to acquire property and equipment are reported as restricted support. Without donor stipulations regarding how long those donated assets must be maintained, the Church reports expirations of donor restrictions when the donated assets are placed in service, reclassifying temporarily restricted net assets to unrestricted net assets at that time. The Church previously received donated property as stated in Note 3. Maintenance and repairs to property and equipment are charged to expense when incurred. Additions and major renewals are capitalized. When assets are retired or otherwise disposed of, the cost or donated value and the related accumulated depreciation are removed from the accounts and any resulting gain or loss is reflected in the accompanying statement of activities. Deferred revenues: The Church recognized revenues as earned. Amounts received in advance of the period in which service is rendered are recorded as deferred revenue in the statement of financial position. Donated goods and services: The Church pays for most services requiring specific expertise. However, a number of volunteers have donated significant amounts of their time in the Church's program services. Because of the difficulty in determining the number of hours for such services, those items are not disclosed in the accompanying statement of activities. However, when the value of donated services requires specific expertise, they are reflected in the accompanying statement of activities as a revenue and as an expense depending on the nature of the services provided. Donated property and equipment is reflected as support in the accompanying statement of activities at its estimated fair value at the time of receipt. 7

10 NOTES TO FINANCIAL STATEMENTS NOTE 2 - SUMMARY OF SIGNIFICANT ACCOUNTING POLICIES (continued) Use of estimates: The presentation of financial statements in conformity with generally accepted accounting principles requires the Church management to make estimates and assumptions that affect the reported amounts of assets and liabilities and disclosure of contingent assets and liabilities at the date of the financial statements and the reported amounts of revenues and expenses during the reporting period. Actual results could differ from those estimates. Date of management s review: Subsequent events have been evaluated by management through May 20, 2014 which is the date the financial statements were available to be issued. NOTE 3 - PROPERTY AND EQUIPMENT Property and equipment consists of the following at : Building and improvements $ 2,558,407 Site improvement 293,701 Equipment 73,507 Furniture and fixtures 15,609 Computer software 4,517 Less accumulated depreciation 2,945,741 1,239,875 Land 1,705,866 3,494,080 $ 5,199,946 The provision for depreciation for the year ended was $ 147,011. The Church previously received a contribution of residential real estate with an approximate fair market value of $ 80,000. As of, this residential real estate is reflected in the accompanying statement of position as property held for sale at fair value of $ 45,000. For the year ended, the Church recorded an unrealized gain on this property of $ 5,813 which is reflected in the accompanying statement of activities. NOTE 4 - INCOME TAXES The Church is a not-for-profit organization, exempt from Federal income tax under Internal Revenue Code 501(c)(3), with the exception of any unrelated business income; therefore, no provision for income taxes is reflected in the accompanying financial statements. 8

11 NOTES TO FINANCIAL STATEMENTS NOTE 5 - LINE OF CREDIT The Church has a corporate credit card with a credit limit of $ 50,000, which can be used for general operating needs. At, the credit card had a balance outstanding of $ 1,562. This balance is included in line of credit payable in the accompanying statement of financial position. NOTE 6 - DEBT At, the Church s debt is summarized as follows: Three mortgage notes payable to a bank, two of which bear interest at a variable interest rate based on the USD- LIBOR-BBA rate plus 225 basis points (2.42% at ). The remaining note has a five year adjustable fixed rate with an initial rate of 4.75% until April 1, 2016, at which point the rate will adjust to the five year interest rate swap index plus 225 basis points. The notes are due in monthly principal and interest installments with principal amounts aggregating to approximately $ 15,700 at and at increasing amounts through March 2021, with a balloon payment of approximately $ 1,100,000 due in April The notes are collateralized by real property with a net book value of approximately $ 5,187,800. $ 3,231,914 In conjunction with one of the mortgage notes discussed, the Church entered into an interest rate swap agreement with a bank that expires in April This agreement effectively converts the variable rate debt to fixed rate debt to the extent of the notional amount. For the notional principal amount of $ 2,198,461, the fixed rate being paid to the bank is 5.86% while the payment received by the bank is 2.42% (USD-LIBOR-BBA rate plus 225 basis points). The fair value of the swap is based on a quote obtained from the primary financial lender, which was quoted at $ (171,403) as of. This negative value would have been incurred had the Church elected to terminate this transaction at. However, it is management s intention to carry this transaction through maturity. The aggregate future principal payments required on debt are approximately as follows: Year ending December 31, 2014 $ 193, , , , ,900 Thereafter 2,187,400 Total $ 3,231,900 9

12 NOTES TO FINANCIAL STATEMENTS NOTE 7 LEASE COMMITMENTS The Church leases property under the terms of a noncancelable operating lease, payable in monthly installments of $ 6,500, expiring in December The Church also leases office equipment under the terms of noncancelable operating leases, at an aggregate amount of approximately $ 300 per month, expiring in June The aggregate future payments required on the above leases are approximately as follows: Year ending December 31, ,000 Thereafter - Total $ 80,000 NOTE 8 - EMPLOYEE BENEFIT PLAN The Church offers full-time ministry and administration employees a tax sheltered benefit plan (the Plan ) under Internal Revenue Code Section 403(b). The employees are allowed to contribute up to a maximum of 20% of their annual gross compensation, subject to certain limitations. The Church makes matching contributions to the Plan for 50% of eligible participant elected deferrals which are not to exceed 3% of each participant s amount of compensation. There is no vesting period for matching contributions. The Church made contributions on behalf of its employees totaling approximately $ 54,200 for the year ended. The Church also makes automatic contributions on behalf of each eligible employee beginning on the 1 st of the month 30 days after the date of hire, or when the employee s 403(b) account is opened, if after the 30 day period. The automatic contribution is a percentage of gross wages, which is contributed for eligible employees based on years of service with the Church. There is no vesting period required for these funds. During the first 5 years of service the automatic contribution is 2% of employee s gross wages. Each 5 year period after that the automatic contribution increases by 0.5% and the maximum contribution is 3.5% after 15 years of service and beyond. NOTE 9 - SUPPLEMENTAL CASH FLOW INFORMATION Supplemental disclosure of cash flow information is as follows: Cash received during the year for interest $ 629 Cash paid during the year for interest $ 183,899 10